Lyft has been eating Uber’s dust for years. Can a series of smart partnerships steer the “nice” ride-sharing startup into its own lane?

Long before there was Uber, 21-year-old Logan Green traveled to Zimbabwe. There, he encountered impromptu fleets of vans that shuttled people around Harare’s chaotic streets. Inspired, he returned to the United States and launched a company called Zimride in 2007. It used Facebook to connect riders and drivers for long-distance trips.

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John Zimmer had nothing to do with the launch of Zimride, despite the fact that it echoes his name, but when he heard about it, it resonated. Zimmer had become obsessed with the idea of ride sharing in 2006 after hearing one of his professors at Cornell give a lecture on green cities. Can you imagine, Zimmer asked a schoolmate over beers, “this future where these pods would come to your doorstep, and they’d get people around, and you wouldn’t have to drive?”

A friend introduced the two dreamers, and before long Zimmer quit his job as an analyst at Lehman Brothers to join Zimride. Their journey has been deeply intertwined with their personal lives. Green used to hitch rides from Santa Barbara to Los Angeles to visit his future wife; one of the first things Zimmer did at Zimride was persuade the woman who became his wife to join him on a cross-country trek he called Zimride Across America. The young execs have become best friends, and Green was Zimmer’s best man. Together, they pivoted from Zimride to Lyft in 2012 and introduced innovation after innovation into the ride-sharing business.

“We’ve never been closer,” Zimmer says of his relationship with Green when I meet the duo at Lyft’s San Francisco offices. (The company stopped putting fuzzy pink mustaches on its cars long ago, but the offices still boast a “Willy Wonka” conference room that one enters by climbing through a faux portrait of actor Gene Wilder in character.) But the 33-year-old Zimmer, who resembles the all-grown-up Fred Savage, from The Wonder Years, could just as well be talking about Lyft’s prospects for success.

Uber’s headquarters are a nine-minute car ride from where we are chatting, but its presence in the room is unmistakable. Today, Lyft is still a distant No. 2 to Uber, its dominant rival. Uber has many more drivers. It has many more passengers. The company has raised $10.3 billion from investors, at a valuation of $62.5 billion. Lyft has raised $2 billion, at a valuation less than one-tenth of that. Uber has launched its service in 68 countries, developed its own R&D facility to speed the arrival of autonomous cars, and is expanding into services to deliver to-go meals, groceries, and other goods. Lyft offers rides in the United States, ferrying only people from point A to point B.

When I ask Bill Gurley—the Benchmark partner who invested early and big in Uber, sits on its board, and often serves as the company’s de facto spokesman—to explain the difference between Uber and Lyft, he says, “Here are some differences I know of: Uber is 15 times bigger. Uber is No. 18 in the App store, and Lyft isn’t that.” (It was No. 122 when I checked later.) “Uber’s strategy is to be the low-cost provider. Similar to Amazon. A Bezosian strategy.”

The Amazon analogy is telling. There is a prevailing view in Silicon Valley that technology-enabled marketplaces create winner-take-all competitions: think Amazon in e-commerce, Google in search, Facebook in social. The examples are powerful, the logic often deemed irrefutable. Uber is clearly the leader in ride sharing; by this calculus, Lyft must be the loser.

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“We are in the first lap of a four-lap race,” says Lyft president John Zimmer, who along with CEO Logan Green, pilots Lyft’s strategy.Photo: Ian Allen

Zimmer and Green never talk as if they’re playing for second place. In the past year, Green, the build-it CEO, and Zimmer, the market-it president, have doggedly unearthed a strategy that may well be clever and powerful enough for the company to carve out a strong competitive position. As Lyft worked throughout 2015 to achieve parity with Uber on critical service details like price and wait time, it also developed a strategy to differentiate itself beyond being the “nice,” or quirky, ride-sharing service. “I always had this idea that we should try to find a few partners with similar values whom we could have long relationships with,” says Zimmer. Between July and January, they put together three remarkable partnerships—with Starbucks; with an international coalition of leading ride-share companies, including China’s Didi Kuaidi; and with Detroit behemoth General Motors. Together these deals create a distinct picture of how Lyft can compete with Uber. Lyft’s goal: establish itself as a distinctive, values-based alternative—the Nordstrom to Uber’s Walmart, the Virgin to its rival’s United.

“We didn’t get into this to replace taxis,” says Zimmer. “That’s just a $12 billion market in the U.S. We want to create an alternative to car ownership, which is a $2.15 trillion market in the U.S. alone,” adding up the annual costs of buying, maintaining, and insuring vehicles. “It’s totally inefficient. The typical car is used for 4% of the day and usually by one person. So that’s 1% utilization of the second-highest household expense in the country.”

It’s highly unlikely that a single company would reap all the rewards of disrupting a market such as this. “We really do expect more change in the next five years than we’ve had in the last 50,” says GM president Dan Ammann, who brokered the deal with Lyft. This isn’t a pure technology play but a case of software meeting an established and mighty industrial sector. Consider the range of competitors involved in this particular transformation—not only Uber and Lyft but also GM, Ford, Tesla, Toyota, BMW, Volks­wagen, Apple, Nvidia, and Mobileye, among others—and the winner-take-all scenario becomes even harder to envision.

The ride-sharing services are at the forefront of the most significant change to car transportation since Henry Ford introduced the assembly line. And Lyft isn’t about to cede the track to Uber. “We’re like that line I saw on an episode of Silicon Valley,” adds Green, also 33, his passion palpable despite his boyish, diffident demeanor. “ ‘I don’t want to live in a world where someone else makes the world a better place than we do.’ ”

He’s joking, but Zimmer nods approvingly. After four years of preliminary heats, the race is finally on.

In the first half of 2015, Uber raised a billion dollars from investors, secured another $1.6 billion in debt financing, lured some 50 engineers from Carnegie Mellon to launch its own robotics facility, and acquired a digital mapping company. It was a dominant burst of activity from a ruthless competitor.

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Zimmer went to Starbucks.

Zimmer had long admired Starbucks CEO Howard Schultz for his management style and values and wanted to meet him. But how to arrange the right entrée? A friend from Zimmer’s Wall Street days introduced him to Bill Bradley, the former New Jersey senator and basketball star and current investment banker and Starbucks board member.

“John and Logan are building a long-term business,” says Schultz. “Starbucks will do as much as we can to support them.”

When he sat down with Bradley, he stressed that “the two things almost every person needs in the morning are a cup of coffee and a ride to work.” Then he explained the ways in which he thought Lyft’s values, embodied by its “We treat you better” mantra, fit with those of Starbucks. Bradley, impressed, arranged a meeting with Schultz.

Zimmer and a couple of Lyft execs flew to Seattle on June 25 for a dinner at Wild Ginger, a popular local Asian fusion restaurant. Nervous, Zimmer decided just before walking in that he didn’t like the color of the shirt he was wearing. He ducked into the restroom of the ice-cream shop across the street to change into another.

Schultz recalls being less focused on Zimmer’s sartorial choices than his humanity. “I’m in the fortunate spot of getting to meet lots of young, aspiring entrepreneurs,” says the 62-year-old CEO of Starbucks. “Every once in a while, one hits an emotional chord with me. I quickly came to see a lot in John that reminded me of me. His ambition to build a great company is obvious, but he wants to build one that can last and serve the public as well.”

Cofounder and partner, Melo7 Tech Partners
The NBA star has dubbed himself “the new digital athlete,” adding Lyft and a handful of other startups to his portfolio within a year of launching his VC firm.

Founder and CEO, Tencent
After forging an unlikely alliance with rival Alibaba to merge two Chinese ride-hailing companies into Didi Kuaidi to blunt Uber, Tencent then backed Lyft in a funding round last year.

Founders, Machine Shop Ventures
The rock band opened its VC firm last year to expand its brand and counted Lyft as one of its initial investments, along with Shyp and Robinhood.

“Howard started and ended the conversation with ‘What can you do for my baristas?’ ” Zimmer recalls. “It reaffirmed our focus on the drivers.” Schultz adds, “The equity of Lyft’s brand is the driver, just as the equity of Starbucks’s brand is the barista.”

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A deal was announced just four weeks later. For now, the partnership is largely focused around connecting Lyft with Starbucks’s rewards program and creating perks for drivers: Lyft drivers automatically get Gold status in the Starbucks Rewards loyalty program, while Lyft passengers earn points in the rewards program with each ride. Soon they will be able to buy a cup of coffee for their driver via a tab in the Lyft app. Starbucks baristas can also get the occasional free ride to and from work via Lyft.

Both Schultz and Zimmer say that this is only the first phase, with new developments coming this summer. “We are having discussions about how we can design the best possible experience to get both your coffee and your ride,” Zimmer says. How might this help Lyft in its competition with Uber? “They can’t possibly create something on their own that has thousands of great locations that are almost bus stop–like,” Zimmer says, “and they can’t invent the kind of ritual of coffee the way Starbucks has.” When Lyft first launched its carpooling service, Lyft Line, it tested “hot spots” for pickup. Might the concept reemerge at Starbucks’s 12,000-plus locations? Zimmer isn’t saying, but “there’s no other partner out there that can provide this kind of scale or future opportunity,” he notes. “We see this as a better way to get a bigger part of the ultimate market.”

“John and Logan are building a long-term business,” says Schultz of Lyft’s dreamers, “not something that’s just for today. Starbucks will do as much as we can to support them.”

If the Starbucks deal offered Lyft access to an expanded base of like-minded, mostly millennial customers (according to Lyft’s internal data, Starbucks is its passengers’ favorite coffee-shop destination), its next partnership took aim at Uber’s extensive (and expensive) international expansion. Rather than raise and then spend billions to attract riders overseas—Uber CEO Travis Kalanick admitted in February that Uber is losing $1 billion a year to compete in China­—Lyft took a restrained, tactical approach. Eight weeks after announcing the Starbucks arrangement, Zimmer and Green unveiled an alliance with Didi Kuaidi, China’s biggest ride-share company, which also agreed to invest $100 million in Lyft. Under the agreement, Didi’s customers would be able to order Lyft rides via Didi’s app when visiting the U.S. and vice versa. In early December, the alliance expanded to include the leading ride-sharing services in Southeast Asia (Grab) and India (Ola). Suddenly, Lyft had the makings of an enviable global footprint.

Both Zimmer and Green say they have preferred the idea of partnering ever since Alibaba signed on as an investor in 2014. But only after the leading Chinese ride-sharing services Didi Dache and Kuaidi Dache merged in February 2015 was a deal a possibility (the two were backed by rivals Tencent and Alibaba, respectively). A month later, in Lyft’s Willy Wonka conference room, Zimmer, Green, and Wang Gang, an Alibaba executive and Didi investor, sketched out on an oversize sheet the network effects that they believed would expand their respective businesses. Connie Chan, a partner at Lyft investor Andreessen Horowitz, translated when necessary. “Wang would go back and forth in Chinese and English,” remembers Zimmer, “but when he got really excited, it was all in Chinese.”

In April, Zimmer made a last-minute trip to visit Didi Kuaidi CEO Cheng Wei in Beijing. (“My wife, Christina, and I had been on a trip to Japan,” he tells me, “and she’d been acting different, although I didn’t know why. So when I decided to add on a trip to China, she went home to San Francisco—and found out she was pregnant.”) “They had built a great business focusing just on China,” says Zimmer of Didi. “This alliance is the right thing for our users, who will get the very best coverage, and for our investors, who don’t have to watch us spend billions of dollars on businesses that might go to zero.” The alliance, he adds, “allows us all to focus our investment and capital on the market where we can make the most profit, where we have local expertise.”

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While the nature of the partnership puts a ceiling on the revenue Lyft could make in these international markets, it allows Lyft to sidestep the headaches of being an American company trying to crack China, India, and Southeast Asia. Anthony Tan, Grab’s Singapore-based CEO, ticks off just a few of the local quirks he contends with: language and dialect barriers; cash as the dominant form of payment; the critical importance of bike sharing along with car sharing; and government regulations that would make any American disrupter quake.

The global partners promise that by the end of this year customers will be able to use their native app to hail a ride in each of the four markets. As with the Starbucks deal, this is merely a first step. Zimmer and Green say they are in constant touch with their foreign counterparts (via WeChat), and friendships have started to develop. All the key players—Green, Zimmer, Tan, and Didi Kuaidi president Jean Liu—are in their thirties and share the camaraderie of peers. Or as Zimmer says, “We give each other a lot of shit,” as he tells me how he routinely makes fun of Tan for wearing tight shirts and never taking off his Beats earbuds, even when he’s making a speech. “I’m like, ‘Why?’ But that’s our style at Lyft. The first value here is be yourself.”

On November 17, 2015, Zimmer walked on stage at the L.A. Auto Show to give a speech that he called, subtly, “Ending Car Ownership As We Know It.” After spending 13 minutes telling the world’s automakers why their business was about to disappear, he went off with Ammann, the president of General Motors, to seal the most significant partnership to date between an automaker and a ride-sharing service.

The two had met a few weeks earlier at Lyft’s offices, when Ammann was in town for a Hewlett-Packard board meeting. Zimmer had had low expectations; the two companies had then been in discussions about how Lyft drivers could get better financing on GM vehicles. (Uber made such a deal with GM in 2013.) “We’ve had conversations with other car companies and they’ll talk about mobility [the academic term for alternatives to car ownership] and press announcements, but with Dan it was actually meaningful,” Zimmer says. “I was surprised that GM was so aligned with our vision.” Zimmer told Ammann that if GM really wanted to work with Lyft, it should invest in the company.

The get-together after Zimmer’s auto-show speech lasted more than three hours. Ammann agreed to lead Lyft’s next funding round, and GM eventually put in $500 million. Again, the specifics came together quickly, in just a few weeks, with Zimmer weighing in via video-conference rather than traveling to Detroit, because his wife was about to give birth. (Zimmer’s wife, Christina, delivered their baby daughter, Penélope, on December 20. As it happens, Green and his wife, Eva, also had their first children last year, twins named Jack and Luke.)

GM, the 108-year-old manufacturer that was, for many years, the biggest corporation on the planet, acknowledges that its basic way of generating revenue is about to undergo a monumental shift. “Our customers are demonstrating to us through their actions that while they still want the convenience of a car, they don’t want the hassle of ownership, particularly in urban environments,” explains Ammann, a 43-year-old New Zealander with a background in investment banking. “We believe ride sharing and car sharing will grow significantly, and the first deployment of autonomous cars will be into ride-sharing programs, not to individual customers.” That’s an astonishing quote, because in 2015 Detroit’s Big Three sold more cars than ever before. If Ammann is right, history may view 2015 as it does 1920, when, as Barclays analyst Brian Johnson has pointed out, horse ownership peaked in the United States. The Lyft deal is a savvy hedge against the glue factory.

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The alliance was announced in San Francisco on January 4. At first, the two companies will collaborate mostly on building a set of rental hubs where drivers interested in working with Lyft will be able to rent GM cars on the cheap. Ammann promises that the first of these will open by the end of March. (Maven, the companies’ joint venture, debuts in Chicago.)

The headlines about the deal have focused on the other aspect of the partnership: the two companies establishing a network of autonomous cars. The Chevy Bolt, GM’s 2017 200-mile-range electric car, may fit well with that plan; perhaps it will sell primarily into ride-sharing fleets rather than to individuals. An adapted Bolt would work especially well for intracity transportation, those 15-minute, 3.5-mile rides that represent the bulk of Lyft’s and Uber’s jaunts. Zimmer and Green believe that autonomous cars will start serving this role in just three or four years, spurred in part by urban millennials, who are not buying cars at the same rate they used to. (According to the University of Michigan’s Transportation Research Institute, just 69% of 19-year-olds even have driver’s licenses, down from 87% in 1993.)

Whether autonomous cars, the next wave of transformation to hit the personal transportation business, will arrive right on the heels of ride sharing, or years later than Zimmer and Green predict, is a matter of much debate. “This isn’t just about some app,” one Lyft employee told me over lunch. Safety is an issue, along with many others: whether riders will pay by the mile, the hour, or some combination of the two; whether riders will subscribe to a car service, the way we subscribe to Verizon or AT&T for cell service; or how many people will continue to want to own their own vehicle. There’s also the vexing problem of what happens to the drivers, who Lyft says are the key to the community it is building around its brand. Zimmer insists that Lyft will still be guided by its priority of “treating people well,” but in this case the inexorable efficiency of technology may make that promise very difficult to keep.

“Our customers are demonstrating that while they still want the convenience of a car, they don’t want the hassle of ownership,” says GM president Ammann.

Zimmer and Green have patched together a strategy that fits their personality and ideals, and also sets Lyft up as a clear alternative. But the future will be as challenging as the past three years, “which have felt like 10,” says Zimmer. Green adds, “It’s good that we have such a foundation of working together. We’ve got that shorthand of communication, and the trust.”

That word—trust—came up repeatedly in exploring Lyft’s partnerships, and it’s the answer to the skepticism I heard about Lyft. As one VC asked me, “Are these real deals, or just press releases?” Zimmer and Green have explicitly sought out like-minded souls, the same way they found each other. “Logan’s been the best thing: having a business partner that you trust completely with everything,” Zimmer says in response to Green’s compliment. That’s what they believe they now have with Didi Kuaidi, GM, Grab, Ola, and Starbucks. That’s what they’ll need to survive.

A version of this article appeared in the April 2016 issue of Fast Company magazine.

About the author

Rick Tetzeli is Editor At Large of Fast Company, which he joined in June 2010. Prior to that he ran and conceived Time Inc’s Assignment Detroit, in which Time, Fortune, Sports Illustrated, Money, CNNMoney.com, Essence and other Time Inc properties all combined to cover the troubled city and region intensely for a year.